Business input key for success of new efficiency standards, claims property sector

EXCLUSIVE: The UK's real estate industry needs to work with Government in the upcoming months to iron out the remaining issues of a new energy efficiency standard for privately rented commercial buildings, a representative from industry body the British Property Federation (BPF) has said.

From 1 April 2023, all existing tenancies will be subject to minimum energy performance standards, with F and G-rated building phased-out of British building stock

BPF’s assistant director of sustainability and construction Patrick Brown has told edie that the Minimum Energy Efficiency Standards (MEES), which come into force next year, will pave a way for a “step-change” in the energy performance of properties, but only if Government and industry are pulling in the same direction.

The regulations will mean that private, non-domestic landlords must ensure that properties they rent in England and Wales from April 2018 reach an Energy Performance Certificate (EPC) of at least 'E' before granting a tenancy to new or existing tenants.

The Government's guidance on the MEES, published earlier this year, was largely welcomed by the industry for providing "vital clarity" to businesses. But speaking ahead of his appearance at edie Live later in May, BPF's Brown insisted there are still a few areas that require clarification, around how the regulations define certain types of buildings and the steps businesses must take to comply.

“The definition of listed buidings could do with being clearer,” Brown said. “As it currently stands, there is a degree of opacity as to whether or not a listed building requires an EPC or not. When you look at the wording in the guidance and the definition of what a listed building is, one can end up becoming unstuck quite quickly.

“The other aspect that does need to be clarified is the definition around what a 'voluntary EPC' constitutes. For us, it would be a little bit of a shame if a property which had acquired an EPC through voluntary means was aware of that price discovery of emitting then doesn’t necessarily have to comply with minimum standards, whereas one that has undergone a lease transaction will have to. That appears slightly distortive. At the end of the day, we hope that this has a material effect in some way on pricing. That would appear to stand in the way.”

Around 60% of today’s non-domestic buildings will still exist in 2050, which means that minimum standards to drive improvements in the performance of the existing stocks through energy efficiency upgrades will be essential.

MEES represents a significant risk to companies looking to sub-let space because they will be treated as a landlord and as a result must undergo the same process of due diligence as the superior landlord. To avoid unnecessary friction when the law is applied next year, Brown believes that the Government will need assistance from industry to frame exactly what the problems are and how they can be solved in a "relatively straightforward" way.

“Working with the Government on this, the spirit of collaboration is really going to have to win out here to make sure the regulation is a success," he added. "Whenever a Government drafts legislation, they can’t envisage every scenario that will arise. If there is anything that is design to be market-making, then it is going to need feedback and course correction from industry. It’s the work of Government to take the evidence and soundings of what is happing on the ground and adjust as we go.”

Policy gap

In his capacity at the BPF, Brown heads up the trade association’s EU Engagement work. Brown explained that stretched ministerial resources and capacity over the next few months with issues related with Brexit could prove a potential stumbling block for smooth implementation of the efficiency standards.

Many within the industry are keen to see the UK continue its commitment to the EU Buildings Directive, which enforces all new buildings to be ‘nearly zero-energy’ by 2020. Although the UK may not be technically bound by EU law by this point, Brown is confident a “borrowing approach” will be adopted to the Buildings Directive.

But with half of building emissions reductions policies currently dependent on the EU, concerns exist about a potential “policy gap” in the low-carbon building sector. The Committee on Climate Change (CCC) has consistently reiterated the UK Government is ill-equiped to tackle the issue of reducing emissions from heating the UK's buildings in order to meet the Fifth Carbon Budget.

To comply with these national carbon reduction targets which currently stretch through to 2032, it is estimated that more than 25 million homes will need refurbishing to exemplary standards. Brown believes the best way to deliver a low-carbon building sector will require not just energy efficiency measures, but also smart technologies such as demand response and energy storage.

“There are certain ways to solve these issues,” he said. “By saying that not only do we want to make our buildings more efficient, but also make them more intelligent and smarter. We should also look to embed demand response and introduce of electric vehicles (EV) charging at non-peak hours to top up generated capacity to tackle peak demand.

"In my view, we certainly need to be moving that big because the energy infrastructure that we have probably isn’t equipped to deal with the mothballing of existing energy generation at the rate that we are going. Secondly, we are not building the next generation quite fast enough. You need some kind of demand driver for large-scale off-site clean energy, in addition to vertically integrated EV charging and PVs on the roof, super-efficient buildings with demand response, in order to tackle all of those challenges.”

Patrick Brown at edie Live 2017

British Property Federation’s assistant director of sustainability and construction Patrick Brown is among the expert speakers appearing on stage at edie Live 2017 at the NEC Birmingham on 23-24 May.

Brown will be in the Energy Management Theatre on Day 1 of the show, in a session focused on the present and future of the UK energy legislation, enabling energy professionals to stay ahead of the policy curve.